China Ramps Up Health Spending, Targets Smokers

Top Communist Party of China and state leaders at the opening meeting of the Fourth Session of the 11th National People

China’s central government plans to increase spending on health care by 16.3% this year to roughly $26 billion, as part of a broader goal to improve public health and to complete overhauls to the country’s health-care system it introduced in 2009.

As part of the nearly spending initiative, Beijing will increase its per-capita funding for basic health services to 25 yuan, or $3.8, per capita, up 67% from a year earlier, said China’s Premier Wen Jiabao on Saturday, in a speech delivering the government’s plans for the upcoming year. The government will also allocate 76 billion yuan to increase health-insurance coverage and to boost insurance subsidies to 200 yuan, up from 120, per person.

“We need to put people first, make ensuring and improving their well-being the starting point and goal of all our work,” Mr. Wen said in his two-hour address.

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The increase in health spending is a core part of China’s plan to restructure its health-care system to provide affordable access to hospital care, medical treatment, and pharmaceuticals. In 2009, leaders pledged 850 billion yuan over three years for a measure to create universal access to health care by creating basic medical insurance coverage for 90% of its 1.3 billion people.

Including this year’s appropriations, the government has spent around 450 billion yuan on health care.

Beijing also hopes that by lowering health-care costs, it will help drive domestic consumption. Households in China save 28% of their annual income, according to investment research group CLSA Asia-Pacific Markets, and fear of high hospital bills is among the main reasons. Instead of saving for medical expenses, the government hopes consumers will buy consumer goods.

Health spending accounts for 3.2% of the government’s 5.43 trillion yuan in overall expenditures this year, and will go toward the prevention of chronic and mental illnesses, as well as HIV and AIDS, Mr. Wen said. Nearly 300 billion yuan, or 5.5% of total spending, is being spent on general education.

China also appears to be stepping up its antismoking campaign. For the first time, the government’s five-year plan included a proposal to ban smoking in public places, the state-run Xinhua news agency reported Saturday. According to Yao Naili, dean of the China Academy of the Chinese Medical Sciences, more than 1 million people die from smoking-related diseases in China each year, Xinhua said.

“China’s pace of antismoking had been rather slow, therefore the decision was not easy,” said Yue Bingfei, a member with the National Committee of the Chinese People’s Political Consultative Conference and a research fellow with the National Institute for the Control of Pharmaceutical and Biological Products.

The funding also aims to increase insurance coverage and health facilities for citizens in rural China. To fill a void of medical facilities beyond big cities, Mr. Wen said China will increase the number of county, township, and village health networks, and will encourage nongovernment organizations and foreign investors to open private practices.

China’s rural areas have been plagued by poor access to care, the World Bank said in a recent report on China’s health-care system. Urban residents have been given access to specialty hospitals, university research centers, and more-experienced doctors, while rural citizens face subpar treatment and are often prescribed an “irrational” array of drugs, the report said.

Officials acknowledge the health divide. Minister of Health Chen Zhu was quoted in state-owned English-language newspaper China Daily on Friday as saying, “It’s also a worry that the capacity of grassroots-level hospitals is quite limited.” He added that 8,000 county-level hospitals don’t have dialysis treatment facilities.

If China were to spend about 1.5% to 2% of its annual GDP, it could guarantee national access to primary care, the World Bank report said, citing a recommendation from the World Health Organization. If China’s GDP grows at the target 8% rate this year, the central government’s health care spending would account for 0.4% of GDP.

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